Why Medicaid Work Requirements Won’t Work

By Jared Bernstein and Ben Spielberg

March 22, 2017

WASHINGTON — Paul Ryan’s plan to replace Obamacare is headed to the House floor on Thursday for a vote that, even now, could go either way. That may sound surprising since Republicans have a sizable majority in the House. But if you’ve been following the debate over their replacement plan, the American Health Care Act, you know that, as harsh as it is, it’s not draconian enough for some members of Speaker Ryan’s party.

In an attempt to win over those lawmakers, the Republican leadership has offered ideas to restrict coverage even further. One of the worst is a Medicaid work requirement.

That may sound sensible to conservatives who, contrary to evidence, believe that Medicaid receipt discourages work. But it’s a mistake. Not only would this proposal make an already punishing bill even harsher, but it also constitutes an unnecessary add-on that has nothing to do with the purpose of Medicaid.

Most poor people who can work do: A recent study of adults affected by Obamacare’s Medicaid expansion, for example, found that 87 percent of able-bodied beneficiaries were working, looking for work or in school.

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Paul Ryan speaking about the Republican health care proposal on Capitol Hill on Tuesday. One of its provisions would allow states to impose work requirements for Medicaid recipients.CreditJ. Scott Applewhite/Associated Press

Of the remaining 13 percent, it found, “three-quarters report they are not working in order to care for family members and the rest report other reasons, like being laid off.” Most other able-bodied people already receiving Medicaid before the expansion are also working, raising the question of what problem, exactly, the proposed requirement is meant to solve.

In fact, the Republicans get the issue backward: Medicaid already supports work. As a recent study of Medicaid in Ohio put it, recipients “reported that Medicaid has made it easier to secure and maintain employment.” A woman who was suffering from a severe hernia was unable to get out of bed. Once on Medicaid, she got the surgery she needed and reported being “back to work and feeling much better.”

Republicans typically deny this reality, in part because they’ve convinced themselves that the work requirements in the welfare reform bill of 1996 were effective in increasing employment among single mothers. However, research suggests those gains were driven more by strong demand for low-wage labor in the late 1990s and by the expansion of the earned-income tax credit.

The strongest evidence for this is what happened when that uniquely welcoming labor market disappeared. Welfare reform and its work requirements remain in place, but the employment rates for single mothers have fallen consistently since 2000. That result jibes with findings from other studies showing that any increases in employment following the introduction of work requirements are small and short-lived, and that such requirements fail to improve low-income people’s employment prospects in the long run.

So what do work requirements do? At best, they encourage people who were going to work anyway to do so a little sooner, perhaps shaving a few weeks off the time they are unemployed. But more important, they terminate needed benefits for people facing significant barriers to employment.

Supporters of work requirements claim that the rules can be structured to exempt people who can’t work, but that doesn’t happen in practice. “It can be difficult and burdensome for people,” explained Hannah Katch, a Medicaid expert, “to prove to a state bureaucracy their inability to meet a work requirement that has been imposed on them.”

As their experience under welfare’s work requirements demonstrates, people who are caring for family members or who have health or mental health impairments, limited education or criminal records, or who lack access to support like child care would all be at risk of losing their health care if a Medicaid requirement were passed.

To be sure, providing work opportunities is a worthy goal, especially given the extent to which anti-poverty policy is already tied to work. What is needed, then, aren’t more sticks, but more demand-side policies to provide enough decent jobs.

Too often, though, proponents of work requirements assume that all it takes for a poor person to get a job is to want a job. But while the overall unemployment rate is now low, many people face clearly inadequate opportunities, such as those in rural areas and those with criminal records.

On the supply side, benefits like educational assistance, job training and child care assistance also enhance opportunities, as does health coverage itself, especially for those struggling with addictions. In this regard, President Trump’s budget and Mr. Ryan’s Medicaid-slashing health care plan push hard against labor market opportunities for the poor.

By-the-bootstraps ideology may be appealing to some, but it can blind people to the reality that jobs aren’t always available to those who seek them and that many people who might otherwise want jobs can’t take them because of the various obstacles they face. Offering them help to find those jobs while simultaneously ensuring their access to health care is the best way to create a humane, efficient labor market.

Jared Bernstein is a senior fellow at the Center on Budget and Policy Priorities, where Ben Spielberg is a research associate.